document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1137080>Question 1137080</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Hi,<BR>\n" );
document.write( "I really would appreciate a bit of help with this problem:\r<BR>\n" );
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document.write( "Suppose that you borrow $30,000 to pay for college. You can select one of the following loans, each requiring regular monthly payments.\r<BR>\n" );
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document.write( "Installment Loan A: ten-year loan at 4.7%<BR>\n" );
document.write( "Installment Loan B: five-year loan at 6.2%\r<BR>\n" );
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document.write( "1. Find the (a) monthly payments, (b) total payback amount and (c) total interest for Loan A and B. Show your work.\r<BR>\n" );
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document.write( "2. Which loan would you prefer to take out and why?\r<BR>\n" );
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document.write( "Thank you in advance! </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #754946 by </B><A HREF=/tutors/aboutme.mpl?userid=rothauserc><B>rothauserc(4718)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=rothauserc><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=rothauserc><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=754946\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> The formula for installment loan calculations is<BR>\n" );
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document.write( "Monthly Payment = ( r * PV ) / ( 1 - ( 1 + r )^(-n) )<BR>\n" );
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document.write( "Where r is the annual interest rate divided by 12, PV is the loan amount, and n is the total number of payments<BR>\n" );
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document.write( "Loan A<BR>\n" );
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document.write( "n = 10 * 12 = 120<BR>\n" );
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document.write( "r = 0.047 / 12 = 0.0039<BR>\n" );
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document.write( "Monthly Payment = ( 0.0039 * 30000) / (1 - (1 + 0.0039)^(-120) ) = $313.52<BR>\n" );
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document.write( "Total Payback Amount = $37622.40<BR>\n" );
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document.write( "Total Interest = $7622.40<BR>\n" );
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document.write( "LOAN B<BR>\n" );
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document.write( "n = 5 * 12 = 60<BR>\n" );
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document.write( "r = 0.062 / 12 = 0.0052<BR>\n" );
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document.write( "Monthly Payment = ( 0.0052 * 30000) / (1 - (1 + 0.0052)^(-60) ) = $583.34<BR>\n" );
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document.write( "Total Payback Amount = $35000.40<BR>\n" );
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document.write( "Total Interest = $5000.40<BR>\n" );
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document.write( "Choose LOAN B since it requires $2622 less interest ($5000.40 vs $7622.40)<BR>\n" );
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